Another innovation has spawned from the world of cryptocurrencies, and it’s taking the market by storm: NFTs, or nonfungible tokens.
NFTs are certificates of authenticity for digital content that are stored on a blockchain, the technology behind many cryptos.
By using an NFT, a content creator can prove a digital item is unique and confirm its rarity. This prevents a duplicate from being created and leads to a state of scarcity.
Although there are countless use cases for NFTs, the tokens have taken the spotlight in industries such as art, media and collectibles.
It is not uncommon to see NFTs command prices in the millions of dollars, but the average selling price in May was around $80. This shows both small and large NFT purchases are being made, and NFTs are not limited to the ultrawealthy.
But some have questioned whether there will be continued interest in buying NFTs, since the underlying item can typically be viewed online for free.
While this is a valid question, the growth speaks for itself.
The Future Looks Bright for NFTs
Investors and collectors alike are swarming to gain exposure to NFTs.
Between the fourth quarter of 2020 and the first quarter of 2021, global NFT sales surged 2,100% to $2 billion. Fueling this growth has been a rapid rise in the number of NFT transactions.
According to DappRadar, the average number of daily NFT transactions at leading marketplaces AtomicMarket and OpenSea climbed nearly 1,900%, from 39,000 per day in early January to 780,000 per day at the end of May.
The NFT market is volatile, and transaction activity has fluctuated over time. But the overall trend has been higher, pointing to a continued increase in adoption.
Importantly, NFT sales remained robust during the recent crypto pullback.
This should silence the critics that have called NFTs a short-term fad. That’s because the fad trades are typically the first to fall apart in periods of market turbulence.
So, the future looks bright for NFTs, and big brands will be the next group to partake in the technology’s adoption.
Research Analyst, Strategic Fortunes